New Nuclear Power Stations

Charles Hendry Excerpts

Tuesday 13th July 2010 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

It is a great pleasure and privilege to serve under your chairmanship, Mr Streeter. I thank my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) for securing the debate and leading it with his normal approach of combining passion, vigour, commitment and enthusiasm with addressing the issues directly. He is absolutely right that this is a long-term decision, and we must see it in that context. Our decisions on nuclear will be some of the most important taken on energy policy by this Government. We therefore attach great importance to how those decisions are made and realise that they must pass the test of time.

My hon. Friend is also right to remind us that we are discussing national issues. A development such as Hinkley is of national significance, and it will play an important role in our future electricity generation, if it goes ahead. I totally accept the background to his argument. He raised several issues during his speech that do not relate directly to the work of my Department. I am pleased that he is meeting the Secretary of State this afternoon to discuss Building Schools for the Future and I will be interested to know the outcome. However, I am keen to set out clearly the approach of my Department and the Government to the building of new nuclear.

We set out a clear plan for nuclear in the coalition agreement. We are committed to allowing the construction of new nuclear plants, subject to the normal planning process for major projects and the fact that they should be without public subsidy. We will continue to take forward the national policy statement and the process through Parliament.

New nuclear has a clear role in the energy mix, but we are certainly alive to many people’s concerns about the costs of such activities, so we are absolutely clear that there should be no public subsidy. In that respect, our position is broadly the same as the previous Government’s. It is for private sector energy companies to construct, operate and decommission plants, but it is for the Government to ensure that there is appropriate safety, security and environmental regulation.

We will ensure that the taxpayer is protected now and in the future from such costs. Operators will be required by law from the outset to set aside money to pay for long-term waste management costs. Having considered various possible subsidy issues, we will ensure that the taxpayer is protected. I am encouraged that despite those restrictions, which are some of the toughest in the world, Britain is nevertheless the most exciting place in Europe—perhaps in the world—for the construction of new nuclear plants. Many companies are keen to invest on that basis.

We are also committed to removing barriers to investment. The work of the Office for Nuclear Development has been fundamental to that, as has the nuclear development forum, which considers how to address the practical issues that can present challenges. On that basis, we will drive forward work on planning, regulatory justification, the generic design assessment and waste and decommissioning financing arrangements. The Government are required to undertake regulatory justification. We will take a decision after we have finished considering responses to the recent public consultation on how best to proceed.

On waste and decommissioning financing, we must redouble our efforts to deliver a framework for dealing with the costs that protects the taxpayer and provides both taxpayers and operators with clarity. The consultations on the fixed unit price and waste handling regulations have closed. We are now considering our responses carefully and will respond in due course.

I know that, to the companies proposing plans for reactor designs, the process for the generic design assessment is fundamental. I am encouraged by the nuclear installations inspectorate’s recent comments that it is on course to conclude by June 2011. The Environment Agency is consulting on its preliminary findings.

We have also indicated that there needs to be reform of the nuclear regulator, which must be structured and equipped to meet current and future challenges. In its role as a nuclear regulator, the Health and Safety Executive has responded to those challenges, but I am persuaded that reform is needed to meet the specific challenges of the sector. I want an effective, efficient and independent nuclear regulator to ensure that we have transparency and accountability. Those are some of the big national issues that we have to take into account as we consider how the programme moves forward.

I want to pick up on my hon. Friend’s concerns about the planning system. We have said that we are determined to reform the planning system. The changes made by the previous Government addressed some of the issues about the speed of the process, which they were right to identify, as applications and considerations could sometimes go on for years. They put in place a process to deal with that, but it did not have democratic accountability.

We have decided that national policy statements should continue to be an integral part of the process, but that they will be subject to a substantive vote in Parliament. That will give national policy statements greater democratic legitimacy and reduce the risk of judicial review. Following the consultation on the national policy statements, we were required to take account of the public meetings and the thousands of submissions that were received, which we are currently considering. I assure my hon. Friend that we will set out our further consideration on the NPSs as soon as we can, because we understand how significant the matter is to all those involved in the sector.

My hon. Friend also correctly identified the changes that we intend to make to the Infrastructure Planning Commission. Again, we thought that that organisation lacked democratic legitimacy. The changes will mean that the back-office function and the analytical work carried out on individual applications will be done by a dedicated unit—the major infrastructure planning unit—which will come under the Planning Inspectorate. Instead of the unit’s recommendations going to a competent but, nevertheless, unelected quango, they will go to the Secretary of State.

For those who are concerned about the time scales, I can give a clear assurance that there will be an obligation on the Secretary of State to make a decision within the same time scale under which the IPC would have proceeded, so there will be no delays. Critically, an application under the transitional arrangements will continue under the same jurisdiction in which it started. There is no risk that an application made under the current system will have to be started again from scratch when the changes come into place. We want to make sure that people who are investing know there will be certainty about the time scale in which the process will move forward.

My hon. Friend also talked about business rates. It is proper to debate the wider issue of whether allowing some business rates and new business activities generally to be kept locally is a good way of encouraging local authorities to stimulate business activities in their areas. On energy issues—this picks up on the final part of his speech—we have said that we are keen to build a new relationship between energy installations and the communities that host them. If a community is hosting something such as a wind farm on behalf of the wider interest and not purely for the benefit of that community, it is reasonable to find ways of recognising that.

We want to find new ways of achieving shared ownership so that direct funding returns come into a local community. We also want to consider how the business rates that become payable as a result of that development can be maintained locally for the first few years. We are in discussions with our colleagues in the Department for Communities and Local Government to see how broadly based that approach can be, because if that same approach were to be applied to a nuclear power facility, as my hon. Friend said, many tens of millions of pounds would come into the local community, which would make a significant contribution towards the infrastructure and educational changes that might be necessary. I am holding continuing discussions with my colleagues in the DCLG on that basis, and we understand the need for early clarity.

On the specific application at Hinkley Point, EDF is carrying out consultations in preparation for submitting a planning application. Realistically, we think that nothing will come forward until this winter or next year, by which time we would expect the national policy statements to have gone through the parliamentary approval process. Given the legal constraints on those issues, I hope that my hon. Friend will understand that there is a limit to what I can say at this stage. We have found the consultation process extremely helpful in understanding the wider picture and the views of local communities and national organisations.

[Albert Owen]

The Minister is being as helpful as he can. On the planning issues, he indicated earlier that when the recommendation is made to the Secretary of State, the same time frame that existed under the old system, which did not get a chance to develop, will be used. Will he indicate roughly what period that will involve? If the companies and developers are going to submit this autumn, when is the unit likely to make its recommendation to the Secretary of State, and how long will the Secretary of State take?

[Charles Hendry]

A consultation process is ongoing. The expectation of the IPC was three months, and we will be looking at the same sort of period. We will be able to provide further clarity in due course. The other advantage of our approach is that it reduces the risk of judicial review. If someone who is accountable to Parliament—someone who can be called before Select Committees, or who can attend debates in Westminster Hall and elsewhere—has responsibility for a decision, it can clearly be shown that that has received greater democratic scrutiny and it is therefore more robust.

My hon. Friend the Member for Bridgwater and West Somerset also rightly mentioned nuclear waste. We must focus clearly on how we manage the new generation of nuclear waste and spent fuel, as well as the legacy issues. When the Secretary of State and I visited Sellafield recently, we were both struck by the magnitude of the challenge facing the Nuclear Decommissioning Authority. It has put in place significant measures to try to deal with nuclear waste and we now have a system that addresses the magnitude of that challenge. However, we must also ensure that measures are in place to deal with the safe disposal of the new waste that will be generated as a result of a new-build programme.

On the hosting of installations, we have been encouraged to note that three local communities in Cumbria have come forward. We are certainly keen to know whether other communities wish to come forward, because we are absolutely committed to a voluntarist approach. The process will not work if it involves the Government saying to a community, in a national lottery style, “It’s going to be you.” The local community must buy into the process, be keen to participate and understand the benefit that it would get from hosting a facility. It has been instructive to see how that has been done elsewhere. A couple of years ago, I went to Sweden to look at how it is carrying out such a process. Two communities were bidding against each other to host a facility because they could see the benefits. It is clear to us that that will be an important part of the process as we go forward.

We recognise that if we are to stimulate the sort of investment that my hon. Friend talked about, further signals to the market will be necessary. There is a great deal that we can do to remove regulatory burdens and streamline the process. However, at the same time, we recognise that there needs to be greater clarity about the carbon price. I am therefore pleased that my right hon. Friend the Chancellor announced in his recent Budget that a consultation on the carbon price will take place this autumn, with a view to setting a floor price. Investors need to know what carbon price they will be paying when these plants come online. It is important to state that such a measure is not a subsidy for nuclear, because we believe that the carbon floor price will drive investment in all low-carbon technologies—nuclear, coal with carbon capture, and renewable technologies. That is one of the most important decisions we will make during this Parliament for the sector.

Finally, I shall mention some of the education issues. It is clear that the people who currently work in the nuclear industry are part of an ageing work force—some 80% of today’s industry work force will retire by 2024. Those people have fantastic skill sets and an enormous amount to contribute to the industry, but we must do more to bring a new generation of people into the sector. I am pleased that there have been collaborative projects—for example involving the nuclear advanced manufacturing research centre, to which the Government have committed more than £33 million. That will help to ensure that we take forward opportunities and bring business into the UK supply chain, which we consider to be an important part of the issue. My hon. Friend mentioned the facilities at Bridgwater college. I am glad that it will receive more than £4 million to launch the south-west energy skills centre, which is a specialist nuclear skills training centre. I am also encouraged that EDF already trains about 2,500 people a year nearby at Barnwood, which shows some of the commitment that it is bringing to the sector.

In conclusion, this could be one of the most important energy and industrial sectors for Britain. My hon. Friend is right to say that it is a national issue that needs to be treated as a national challenge and opportunity. I hope that what I have said reassures him of the seriousness with which we are addressing the matter.